There is a particular kind of policy failure that is especially frustrating to observe: the kind where the harm is entirely predictable, the evidence is available in advance, and the government proceeds anyway because the political optics of appearing to act trump the practical consequences of acting badly. Britain's approach to the private rented sector is a textbook example of exactly this failure.
The Renters' Rights Bill, currently progressing through Parliament under the Starmer government, will abolish Section 21 'no-fault' evictions, introduce a new Decent Homes Standard for the private rented sector, restrict rent increases to once per year, and establish a new Private Rented Sector Ombudsman to handle disputes. On their face, these sound like reasonable protections for tenants. In practice, combined with the cumulative weight of regulatory change that has already been imposed on landlords since 2016, they represent the accelerating dismantlement of the private rented sector — and the people who will suffer most are the very renters the legislation is designed to help.
The Exodus That Is Already Under Way
The landlord retreat from the private rented sector did not begin with the Renters' Rights Bill. It began in 2016, when George Osborne's decision to restrict mortgage interest relief for landlords — phased in fully by 2020 — fundamentally changed the economics of buy-to-let property ownership. Section 24 of the Finance Act 2015, as it became known, meant that landlords could no longer offset their full mortgage interest costs against rental income for tax purposes. For many leveraged small landlords operating on tight margins, the result was that they were being taxed on profits they were not actually making.
The Stamp Duty Land Tax surcharge on additional residential properties, introduced at three percentage points above the standard rate and since raised further, added a significant barrier to entry for new landlords. The removal of the 'wear and tear' allowance for furnished properties compounded the pressure. And the prospect of energy efficiency mandates — requiring rental properties to achieve an EPC rating of C or above — has confronted landlords of older Victorian and Edwardian stock with retrofit costs that can run to tens of thousands of pounds per property.
The numbers tell the story plainly. According to data from Hamptons estate agents, landlords sold more properties than they purchased in every year from 2016 to 2023. The National Residential Landlords Association (NRLA) reported in 2024 that over 40 per cent of its members were considering selling at least one property within the next two years. Zoopla and Rightmove have both documented a sustained fall in the number of rental properties available to let in most major UK cities, while average rents have risen to record levels in real terms.
In London, average asking rents rose by over 30 per cent between 2021 and 2024, according to Rightmove's quarterly rental tracker. In Manchester, Bristol, and Edinburgh, the picture is comparable. Supply is falling. Demand — driven by population growth, delayed homeownership, and rising student numbers — is not.
The Ideological Blind Spot
The political left's instinct toward landlords is essentially moralistic: the landlord extracts rent from the tenant, the tenant has no choice but to pay, and the power imbalance justifies regulatory intervention to protect the weaker party. This framing has emotional and, in some cases, empirical force. There are bad landlords. There are tenants in genuinely precarious situations who lack the practical ability to exercise their legal rights. The abolition of Section 21 is not, in itself, an unreasonable policy goal.
But the moralistic framing obscures the market reality that housing policy must reckon with. A private landlord is not simply an exploiter extracting value from a captive tenant. A private landlord is a supplier of housing. When you make it sufficiently unattractive to supply housing — through taxation, regulation, compliance costs, and legal uncertainty — suppliers exit the market. That is not a political opinion. It is how markets function.
The strongest version of the counter-argument is that institutional and corporate landlords will fill the gap left by small buy-to-let investors, bringing professionalised management and better-maintained stock. This argument deserves engagement. The build-to-rent sector has grown substantially over the past decade, and institutional landlords do, in some respects, offer more consistent standards than the fragmented small-landlord market.
But build-to-rent is concentrated in city centres, skewed toward higher-income renters, and nowhere near large enough to compensate for the retreat of small landlords from the broader market. The approximately 4.6 million households in the private rented sector in England — a figure that includes millions of lower-income families, young people, recent immigrants, and others who have no realistic prospect of homeownership in the near term — cannot be housed by institutional investors targeting yields in Manchester's Ancoats or London's Canary Wharf.
What a Functioning Rental Market Actually Requires
The free-market case for the private rented sector is not a defence of every landlord's behaviour. It is a recognition that housing is a commodity subject to the laws of supply and demand, and that policy which reduces supply while leaving demand unchanged will always result in higher prices and worse outcomes for tenants.
A government serious about affordable renting would pursue the opposite of the current agenda. It would reverse the Section 24 mortgage interest restriction, which has no economic justification as applied to genuine small-scale landlords managing one or two properties as a supplementary income source. It would recalibrate the Stamp Duty surcharge to distinguish between speculative portfolio accumulation and small-scale investment. It would set energy efficiency targets on a realistic timetable with accessible grant support, rather than imposing compliance deadlines that simply accelerate the decision to sell.
Most fundamentally, it would acknowledge that the private rented sector is not a policy problem to be solved by driving landlords out — it is a critical component of the housing market that millions of people depend upon, and that depends in turn on sufficient landlords choosing to remain in it.
The Renters' Rights Bill may well pass. Section 21 will likely be abolished. The regulatory burden will continue to accumulate. And in five years' time, when rents are higher, supply is tighter, and the waiting lists for social housing stretch further than ever, ministers will discover — as if for the first time — that the market responded to the incentives they created.
Driving landlords out of the market does not make housing more affordable — it makes it scarcer, and the people who pay the price are invariably those with the least power to absorb it.
